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Exam 17: Financial Management

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Question 81

Multiple Choice

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A _________ represents a long-term debt obligation issued by a corporation or government.

A) share of stock
B) commercial note
C) certificate of deposit
D) bond

E) None of the above
F) All of the above

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Question 82

Multiple Choice

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The most widely used source of short-term funding is:

A) trade credit.
B) line of credit.
C) factoring.
D) commercial finance companies.

E) B) and C)
F) All of the above

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Question 83

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Anna operates a florist shop specializing in weddings.While she knows that her competitors allow customers to buy on credit,she is concerned about the risk and expense of unpaid customer accounts.One strategy to reduce risk and collect sales revenue more quickly would be to accept bank-issued credit cards.

The terms 2/10,net 30 indicate that the seller is offering a 10% discount for early payment.

Some suppliers hesitate to offer trade credit to firms with a poor credit history.In these cases,the supplier may insist that the customer sign a(n) :

Akiko realizes the importance of developing a ________ for her interior design business.Akiko knows of no better way of establishing revenue expectations and allocating resources in order to achieve the goals of her firm.

The concept of the time value of money indicates that:

Utilizing equity financing may result in new owners buying an interest in the firm.

In comparing the roles of accounting and finance

A just-in-time inventory system allows a firm to:

Corporations that issue stock to raise long-term funds accept the legal obligation to repay the amount borrowed.

Factoring refers to the process of selling inventory to generate short-term funds.

Successful businesses establish restrictive credit policies encouraging customers to pay cash.

A line of credit from a bank guarantees a firm that a specified amount of financing will be available whenever it is needed.

An effective strategy to manage cash flows requires retail businesses to eliminate their inventory.

Efficient cash management requires firms to pay their bills as quickly as possible,and delay the collection of accounts receivable.

According to the risk/return tradeoff,the higher the risk,the lower the interest rate charged by the lender.

)Financial managers are responsible for accounts receivable and accounts payable management.

Based on the time value of money,$100 received a year from today is worth more than $100 received today.

A company's capital budget helps management plan for cash shortages or surpluses.